Malaysia Airports Holdings (MAH) has announced that a new MR.2bn ($540m) low-cost terminal is to be constructed by 2011 in an effort to build Malaysia into a major regional travel hub which can compete with

Singapore and Thailand.

MAH believes this can be achieved through the efforts of the country's main low-cost carrier, Air Asia and it provided the first details of the new terminal this week.

The Terminal will be built some 1.5km west of Kuala Lumpur International Airport, as opposed to the existing low-cost terminal which is an inconvenient 20kms away. Air Asia has already welcomed the move, having cleverly irritated the government with an earlier proposal to build a MR.1.6bn ($$432m) in southern Negeri Sembilan state, which would clearly have moved low-cost operations and Air Asia away from Kuala Lumpur.

Needless to say, AirAsia Deputy CEO Kamarudin Meranun has already told local press that he welcomes the development, although he wasn't slow to point out that charges must remain low if it is to work.

Completion of the new facility is expected by the third quarter of 2011 when it is expected to offer a passenger handling capacity of 30m a year, plus the flexibility for expansion to 45m capacity if needed. Importantly, the new terminal will connect with the existing airport infrastructure and the main terminal building at KLIA.